Qantas calls for scrutiny of rival's foreign ownership

Qantas has stepped up efforts to pressure senior federal politicians to take a closer look at whether Virgin Australia is abiding by aviation laws, in the wake of foreign airlines boosting their stakes.

Qantas has stepped up efforts to pressure senior federal politicians to take a closer look at whether Virgin Australia is abiding by aviation laws, in the wake of foreign airlines boosting their stakes.

The renewed lobbying also highlights nervousness within Qantas about the longer-term intentions of Virgin's largest shareholders, notably Singapore Airlines.

Qantas is concerned that Singapore Airlines might use its cornerstone stake in Virgin to influence politicians to give it access to routes between Australia and the US. The Pacific routes are among the most profitable in Qantas' international network.

In the lead-up to the election, Qantas has sought to point out that it is at a distinct disadvantage to Virgin, of which Air New Zealand, Etihad and Singapore Airlines own more than half.

Qantas argues that, unlike Virgin, it must adhere to legislation that caps ownership by foreign airlines at 35 per cent. Under the Qantas Sale Act, a single investor can own no more than 25 per cent of the national carrier.

The airline renewed its argument that Virgin circumvented the Air Navigation Act by splitting its business in two. The act stipulates that Australian airlines limit foreign ownership to 49 per cent if they are to benefit from traffic rights on international routes.

The split of its business has allowed Virgin to open up its share register to foreign airlines while retaining an Australian designation for its international operations.

Air New Zealand is awaiting approval to boost its stake in Virgin from 20 to 26 per cent, while Etihad has made clear it wants to boost its holdings from 10.5 to 20 per cent. Singapore Airlines has 20 per cent.

Qantas has had some support from the pilots' union which, however, has emphasised inconsistencies in Qantas' argument.

Australian and International Pilots Association president Barry Jackson said the next government needed to reconsider the laws governing Australian airlines.

Mr Jackson said it was clear that Virgin had set up a separate holding company for its international operations to get around the intent of the Air Navigation Act.

But, he said, similar questions needed to be asked of the structure of Jetstar affiliates in Asia, which he said "similarly seem to side-step the requirements of the act".

Qantas refused to comment on any discussions it had held with politicians but said it had always maintained there should be a "level playing field".

"At the moment, one Australian-based airline has restrictions on how it operates and the foreign investment which it can attract, while the other has no such restrictions and is, in fact, now majority foreign-owned," a spokesman said.

Virgin refused to comment.

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